The regulatory agency — working with Attorneys General for California and D.C. — authorized a suit to stop the deal, charging it would violate antitrust laws. The complaints were filed today at the U.S. District Court for the District of Columbia. An administrative trial is scheduled to start November 21.
“This merger would deprive customers of the substantial benefits of direct competition between DraftKings and FanDuel,” says Tad Lipsky, Acting Director of the FTC’s Bureau of Competition. “The FTC is committed to the preservation of competitive markets, which offer consumers the best opportunity to obtain innovative products and services at the most favorable prices and terms consistent with the provision of competitive returns to efficient producers.”
DraftKings is the No. 1 daily fantasy sports provider, and FanDuel is No. 2. Together, they would control 90% of the daily fantasy sports market, the FTC says.
The agency says that providers of season-long fantasy sports contests — including ESPN and Yahoo — don’t provide a “meaningful substitute” for daily ones due to “limitations on number of entrants and several other issues.”
In a joint statement, DraftKings and FanDuel say that they are “disappointed” by the FTC’s decision and “continue to believe that a merger is in the best interests of our players, our companies, our employees and the fantasy sports industry. We are considering all our options at this time.”
In the deal announced in November, DraftKings’ Jason Robins was to become CEO of the merged company with FanDuel’s Nigel Eccles staying as chairman. They estimated at the time that 57 million people in the U.S. play fantasy sports.
Their deal came less than a month after each company agreed to pay $6 million to settle a dispute with New York Attorney General Eric Schneiderman who had accused them of engaging in alleged false and deceptive advertising. He charged that they promoted illegal gambling, not games of skill.
As part of the settlement DraftKings and FanDuel agreed to clearly disclose terms and conditions for marketing promotions, expected winnings, and expected performance in the online contests, as well as resources for players at risk for compulsive gaming disorders. The companies also were required to maintain a webpage that provides information about the rate of success of users in its contests.